DBS first-quarter earnings rise 19% to SGD617
million
* * *
Net interest and fee incomes at new highs
on continued business volume growth
SINGAPORE, 4 May 2007 - DBS Bank today reported net earnings of
SGD617 million for the first quarter, up 19% from a year ago and
11% from the previous quarter. The better performance was underpinned
by broad-based income growth as sustained expansion in DBS' customer
franchise propelled net interest and fee incomes to record quarter
levels. Trading income performed better than recent quarters as
a result of higher customer flows and favourable trading opportunities.
Net interest income up 15% as loans grow 20% from year
ago
Net interest income rose 15% from a year ago and 5% from the previous
quarter to SGD974 million, primarily due to higher asset volumes.
Customer loans rose 20% from a year ago and 9% from the previous
quarter to SGD94.3 billion, led by corporate borrowing in Singapore
and the region. Singapore housing loans grew for a third successive
quarter as the number of new loan applications and the amount of
loan disbursements continued to expand. With customer loans rising
faster than customer deposits, the loan-deposit ratio climbed to
69% from 66% in both comparative periods.
Net interest margins were 2.21%, rising three basis points from
the previous quarter a result of higher loan yields and lower deposit
costs in Singapore, although these were partially offset by narrower
spreads between prime lending rates and funding costs in Hong Kong.
Non-interest income higher from both fee and trading activities
Fee income rose 18% from a year ago and 2% from the previous quarter
to SGD309 million. The growth in fees during the quarter was led
by loan syndication and stockbroking activities. Wealth management
fees also increased as a result of higher sales of unit trusts which
rose 34% from the previous quarter to SGD1.24 billion.
Other non-interest income was better compared to recent quarters.
Net trading income from trading businesses amounted to SGD169 million,
compared to SGD123 million a year ago and SGD68 million in the previous
quarter. There was particularly strong demand from corporate and
SME customers for products to hedge their foreign exchange risks
during the quarter.
Gains from sales of debt and equity investment securities were
also higher during the quarter, amounting to SGD121 million compared
to SGD38 million a year ago and SGD92 million in the previous quarter.
Cost-income ratio falls to 43%
Expenses rose 17% from a year ago and 5% from the previous quarter
to SGD658 million. As in recent quarters, the largest increase was
from staff costs, which rose 20% from a year ago and 18% from the
previous quarter as a result of higher salary base and bigger bonus
accruals in line with the Groups better performance. Computerisation
costs were 22% above a year ago due to higher charges for major
ongoing projects, but they were 7% below the previous quarter. As
income rose more than costs, the cost-income ratio fell to 43% from
44% a year ago and 45% in the previous quarter.
Asset quality improves further
The non-performing loan rate declined to 1.5% from 2.1% a year ago
and 1.7% in the previous quarter. The amount of total non-performing
assets (including debt securities and contingent liabilities) fell
17% from a year ago and 5% from the previous quarter to SGD1.46
billion.
Specific allowances for loans fell to SGD1 million for the quarter
as new charges were offset by write-backs in a benign credit environment.
This compared with a charge of SGD40 million a year ago and SGD59
million in the previous quarter. With an expanded loan base and
higher off-balance sheet exposure, DBS took general allowances amounting
to SGD102 million, compared with SGD14 million a year ago and SGD11
million in the previous quarter.
Total cumulative allowances amounted to 125% of total non-performing
assets, the highest in DBS' history, compared to 100% a year ago
and 115% in the previous quarter.
Return on equity rose to 13.0% from 12.2% a year ago and the previous
quarter, while return on assets improved to 1.21% from 1.14% a year
ago and 1.13% in the previous quarter.
The capital adequacy ratio stood at 13.6%, with the tier-1 ratio
at 9.6%, compared with 14.5% and 10.2% respectively in the previous
quarter as risk-weighted assets increased with a higher loan base.
DBS Vice-Chairman and CEO Jackson Tai said, "Our Asia customer
franchise delivered yet another quarter of consistent growth, even
in the face of strong margin pressure. Our results were encouraging
across businesses and geography, led by higher loan volumes, stronger
treasury results and continued growth in fees. We were disciplined
in keeping costs in line with the rise in operating income, resulting
in higher returns on equity and assets to our shareholders."
The Board declared a dividend of 20 cents per share, unchanged
from the previous quarter but 18% higher than the 17 cents per share
paid a year ago.
About DBS
Headquartered in Singapore, DBS is one of the largest financial
services groups in Asia with operations in 15 markets. The largest
bank in Singapore as measured by assets, and a leading bank in Hong
Kong, DBS' "AA-" and "Aa2" credit ratings are
among the highest in the Asia-Pacific region. DBS has leading positions
in consumer banking, treasury and markets, asset management, securities
brokerage, equity and debt fund raising. Beyond the anchor markets
of Singapore and Hong Kong, DBS serves corporate, institutional
and retail customers through its operations in China, India, Indonesia,
Malaysia, Thailand and The Philippines. More information about DBS
Group Holdings and DBS Bank can be obtained from our website www.dbs.com.